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Tuesday, March 19, 2024

China cuts rates to lift virus-battered economy

Duration: 01:01s 0 shares 3 views

China cuts rates to lift virus-battered economy
China cuts rates to lift virus-battered economy

China has cut rates to help an economy hit by the coronavirus outbreak, but with growth forecast to slump many investors bet there's more stimulus to come.

Julian Satterthwaite reports.

China cut its key interest rate Thursday (February 20) to aid an economy battered by the coronavirus outbreak.

The loan prime rate - a new benchmark introduced last August - fell 10 basis points to 4.05%.

Analysts had widely expected the move, with all 51 polled by Reuters predicting it.

The cut is intended to lower borrowing costs for businesses struggling with a slump in trade.

But economists polled by Reuters forecast that Chinese growth will slump to 4.5% in the first quarter, from 6% in the previous three months.

Some see Q1 as low as 3%.

That leaves investors betting there's more monetary and fiscal stimulus to come.

Thursday's move was cheered by equity traders.

Shanghai's benchmark stock index closed over 1.8% higher following the news.

On currency markets, the Chinese yuan weakened to a more than two-month low.

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